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IMF Deposits $1.2 Billion in State Bank : Dar

Editor Isb by Editor Isb
May 14, 2025
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IMF Deposits $1.2 Billion in State Bank : Dar
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ISLAMABAD: The International Monetary Fund (IMF) has deposited $1.2 billion in the State Bank of Pakistan (SBP) account, providing a glimmer of hope for the cash-strapped nation as it faced the threat of default. The deposit comes as part of a $3 billion Stand-By Agreement (SBA) approved by the IMF executive board on Wednesday after months of tough negotiations over fiscal discipline.

Infusion of IMF Funds Boosts Foreign Exchange Reserves

Pakistan’s finance minister, Ishaq Dar, announced that the remaining $1.8 billion would be received after two reviews scheduled for November 2023 and February 2024. The infusion of IMF funds is expected to improve foreign exchange reserves, with a total of $4.2 billion added to the country’s reserves during the week, including contributions from Saudi Arabia and the United Arab Emirates.

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Gratitude Expressed to Prime Minister Shehbaz Sharif for Securing the Program

Dar expressed gratitude to Prime Minister Shehbaz Sharif for his efforts in securing the program, noting that the agreement would enable the newly elected government to make decisions for the future. The IMF’s support aims to assist Pakistan’s economic stabilization program and pave the way for development.

Rising External Debt Raises Concerns, Urgency for Reprofiling Loans

In addition, the IMF projected a significant rise in Pakistan’s external debt by $12.975 billion for the ongoing fiscal year, reaching $136.549 billion. The country’s external debt vulnerabilities are expected to increase further in the coming years, with projections indicating a potential rise to $152.136 billion by the end of fiscal year 2027-28. Economists are urging the government to consider re-profiling external loans from bilateral creditors to alleviate the rising external debt burden. Concerns about debt sustainability and the inability to print foreign currency for repayments underscore the need for cautious management of foreign loans.

IMF Projections for Inflation and GDP Growth Raise Concerns

The IMF also provided projections for inflation and GDP growth. It estimated that Pakistan’s average inflation could reach 25.9% in the current fiscal year, attributing this to increased power and gas prices. Moreover, the IMF projected a negative GDP growth rate of 0.5% for the last fiscal year, differing from the government’s slight positive growth rate of 0.29%. The IMF’s projection for the current fiscal year’s GDP growth rate stands at 2.5%, lower than the government’s projection of 3.5%.

Government Targets Inflation and Unemployment Amidst IMF Support

The government has targeted an average inflation rate of 21% for the current fiscal year, but the IMF suggests it may reach 25.9%. The unemployment rate is projected to be around 8% for the upcoming fiscal year, and Pakistan’s gross foreign reserves are expected to reach $8.9 billion.

IMF Stresses Policy Implementation and Structural Reforms

According to Kristalina Georgieva, the managing director of the IMF, Pakistan’s economy was severely impacted by various shocks, leading to halted recovery, increased inflation, and depleted internal and external buffers. The Stand-By Arrangement offers an opportunity to regain stability through consistent policy implementation, fiscal consolidation, and structural reforms.

(Islamabad51-Newsdesk)

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